The Private and Social Costs of Patent Trolls

10 Pages Posted: 10 Jan 2012  

James E. Bessen

Boston University - School of Law; Research on Innovation

Jennifer Laurissa Ford

affiliation not provided to SSRN

Michael J. Meurer

Boston University - School of Law

Multiple version iconThere are 2 versions of this paper

Date Written: January 9, 2012

Abstract

The emergence of nonpracticing entities (NPEs) — firms that purchase and hold patent rights but neither innovate themselves nor use the patents in the production of goods — is supposed to incentivize innovation by providing a ready market for innovators. We test this idea empirically and find that NPEs produce little returns for innovators or for their own shareholders, but they place significant costs on productive firms that violate patents inadvertently. Indeed, it appears that NPEs — often disparagingly called “patent trolls” — discourage productive firms from innovating for fear that they will then be subject to a patent troll suit. Thus, NPEs may discourage innovation, resulting in a social loss.

Suggested Citation

Bessen, James E. and Ford, Jennifer Laurissa and Meurer, Michael J., The Private and Social Costs of Patent Trolls (January 9, 2012). Regulation, Vol. 34, No. 4, p. 26, Winter 2011-2012. Available at SSRN: https://ssrn.com/abstract=1982139

James E. Bessen (Contact Author)

Boston University - School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States

Research on Innovation ( email )

202 High Head Rd.
Harpswell, ME 04079
United States
617-531-2092 (Phone)

Jennifer Laurissa Ford

affiliation not provided to SSRN ( email )

Michael J. Meurer

Boston University - School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States
617-353-6292 (Phone)
617-353-3077 (Fax)

Paper statistics

Downloads
424
Rank
828
Abstract Views
1,969